This policy and its associated procedures, definitions, and forms have been established to provide consistent fiscal and administrative practices among the various service center units, and to ensure compliance with both government regulations, Dartmouth's institutional policies and Dartmouth's internal accounting policies.
Dartmouth is a recipient of federal and other sponsored funding to perform research and other academic activities. Research, in particular, may involve the use of resources and core facilities (also known as cores). Each of these areas is organized to provide user services that facilitate research activity by providing goods, expertise, state-of-the-art equipment and/or technology to more than one research group or department. Successful operation requires actively involved scientific and managing directors who interact effectively with researchers and administrative and financial staff. Service Center staff should have an understanding of federal costing policies, Dartmouth financial policies and other applicable policies concerning facility operations such as environmental health and safety and security.
Given the complexity and breadth of knowledge and infrastructure necessary to effectively and compliantly operate a Service Center, this policy, and its associated procedures set forth the framework for creation and ongoing oversight of the financial and administrative aspects of these centers. While the focus of this document is administrative and financial in nature, Service Center managers are required to be knowledgeable of and comply with all other relevant Dartmouth policies.
Service centers are operating units that provide goods or services, principally to users within Dartmouth's academic, research or administrative community. A service center recovers the cost of its operations through charges to its users. Dissimilar services operated by the same department or division, for example a computer facility or a copy center or a machine shop, must be established as separate service center activities, with separate funds, budgets, and rates.
Service Centers are units within Dartmouth divisions, departments or centers that charge for goods or services that directly support Dartmouth's research or academic mission and recover costs through charges to internal and external users. All Service Centers are expected to recover no more than the aggregate costs of their operations through charges to users. All Service Centers must be able to demonstrate compliance with federal requirements and cannot use fee structures that discriminate against federal or other funding sources. All Service Centers must follow the steps outlined in this policy and its associated procedures for approval to initiate a Service Center and for ongoing review and reporting.
Service Centers do not include auxiliary services such as dining services where a unit engages in sales of goods and services that are not directly tied to Dartmouth's mission.
This policy and its associated procedures, definitions, and forms have been established to provide consistent fiscal and administrative practices among the various service center units, and to ensure compliance with both government regulations, Dartmouth's institutional policies and Dartmouth's internal accounting policies.
https://policies.dartmouth.edu/policies
https://www.dartmouth.edu/finance/forms-policies-systems/policy_library/index.php
https://www.dartmouth.edu/osp/compliance/policies/index.php
The cost of running the Service Center facility or providing the product is charged to users on a "rate" basis. Rates are generally formulated to recover the costs of operations such as salaries, benefits, maintenance, repairs, and supplies. There are three types of service centers defined as follows:
A Service Center (SC) is an operating unit established for the purpose of providing goods or services to both internal and external customers and meets the following criteria; the costs of its good or services can be directly identified with the activities in which the goods or services are produced, i.e., its charges constitute direct costs to users; its goods or services benefit instruction and/or research activities; it has a predetermined rate(s) for goods or services; and, there is an element of direct overhead included in the rate(s), i.e., the operation is not simply redistributing the specific cost of individual items or labor hours.
A Specialized Service Facility (SSF) is a service center that provides highly complex or specialized services, see Uniform Guidance Section 200.468 for examples and additional information (link provided on page 9 of this policy). Dartmouth has no specialized service facilities as of June 30, 2021.
A Recharge Center (RC) is an operating unit that provides goods or services as a convenience to generally localized internal customers. Recharge centers typically charge users a retroactive fee based on actual usage and specific costs. Examples of recharge centers include departmental copy machines, fax machines and postage meters.
Throughout this document the term "service center" includes specialized service centers and recharge centers unless differentiated.
The following applies to all service centers:
a. To establish a service center, a department must demonstrate that there is both a need and a clear benefit to be derived from providing goods and services within Dartmouth rather than through an external vendor. Approval must be obtained to establish a service center. (See Appendix A for approval matrix.)
A separate Funding value must be established in Dartmouth's accounting system to record the actual direct operating expenses, revenues, billing, collections, and surplus or deficit for each service center. In addition, Fiscal Officers may require separate funding values to establish a rate stabilization reserve and/or an equipment replacement reserve. A service center must transact in an Activity specifically created for service center use. If an existing general/nonspecific service center Activity value isn't appropriate, a service center may request to establish a new Activity value. Service and recharge activity values are identified as such at parent level L3 or L4.
b. Rates charged to internal users must be based on and designed to recover no more than the direct costs of goods and services being provided. A separate rate must be calculated for each product or service provided. For external users, higher rates may be established to recover all costs of providing goods and services including indirect costs. (See Appendix B for unallowable costs). Only federal allowable costs may be recovered in user fees.
c. Rates must not discriminate between Dartmouth's federally and non-federally supported activities. All internal users must be charged the same rate for the same service under the same circumstances. User fees charged to a federal project may not directly or indirectly subsidize nonfederal users.
d. User fees charged to external users can be higher but not lower than rates charged to internal users. For example, external users can be billed for indirect costs, administrative fees, etc. to create a 'fully loaded' rate. Service centers at a minimum should use the federally approved research rate to determine its charges for indirect costs. Fiscal Officers must approve using a rate lower than the federal indirect cost recovery rate. The negotiated federal rate is available on the Office of Sponsored Projects website: https://policies.dartmouth.edu/policy/service-center-policy
e. Each service center is expected to break even on a fiscal year basis after including subsidies. In certain circumstances it is recognized that it may not be possible for a service center to achieve breakeven results within one year. In this case multi-year breakeven budgets may be established. This extended breakeven period permits the development of more stable user fees, and avoids significant user fee increases and decreases. A general guideline for an extended breakeven is three years. A rate stabilization reserve may be used to record the annual surplus or deficit up to 15% of the estimated/budgeted annual operating expense. An operating surplus or deficit balance above the 15% limit must be reflected in an adjustment to the current or future rate.
f. The methods used to estimate costs, allocate costs, prepare service center budgets, and accumulate costing information for rate computations must be consistent with Dartmouth's cost accounting practices used to identify, record, and report actual charges. Service centers will also adhere to generally accepted accounting principles. This is needed to ensure compliance with federal and Dartmouth policies.
g. All service center activities must be documented, and records maintained, to support rate calculations, units of service/utilization, and expenses incurred, including salary and depreciation schedules for assets, revenues, amount and basis of user billings, collections, the basis of shared costs and any annual surplus or deficit. All records pertaining to recharge operation and service facility activity should be retained for seven years.
h. Service centers must review their rates/fee structure annually and revise rates as necessary to incorporate any surpluses or deficits. A general guideline for an extended break-even time frame is three years. Service centers having projected expenses over $100,000 must submit the proposed rates and documentation of operating costs to the Controller's Office annually for approval. Service centers having projected expenses less than $100,000 must submit the proposed rates and documentation of operating costs to the Controller's Office every three years for approval.
The procedures, forms and instructions listed below can be found on the Finance website: https://www.dartmouth.edu/finance/purchasing/buying_paying/service_centers.php